A Hacker’s Best Friend – How to Avoid Cryptocurrency Fraud

As the crypto world explodes and some analysts predict will reach over USD one billion the challenges will keep on growing. Some of the issues are with cyber issues, starting with wallet security and hacking. Online crime will grow and in crypto world security will be a critical thing.

Bellow is a Guest post by Aziz Rahman, founder and award-winning business crime solicitor of Rahman Ravelli. The bellow article offers some powerful ideas how to deal with cryptocurrency fraud.

It was way back in 2009 that Dr Moores, former technology ambassador for the UK government and chair of the international e-Crime Congress expressed his disbelief at the number of ways criminals could use the anonymity of the internet to their advantage.

Today, with digital currencies becoming firmly established, we are still finding out.

The high-profile victims of the WannaCry ransomware attack included the NHS, Australian railways and a car plant in France. But this was just one way hackers have used Bitcoin and other digital currencies illicitly.

And innocent businesses can easily be affected.

Aziz Rahman, founder of award-winning business crime solicitors Rahman Ravelli explains what businesses can do to protect themselves from fraud in the age of Bitcoin.

What are digital currencies?

For some, digital currencies are a stroke of genius that will liberate businesses. For others, they are an instrument of evil that could harm those using them.

Here’s Eric Schmidt, the Executive Chairman of Google.

“Bitcoin is a remarkable cryptographic achievement. The ability to create something which is not duplicable in the digital world has enormous value. The Bitcoin architecture, literally the ability to having these ledgers that can’t be replicated is an amazing advancement.”

And here, by contrast, is JP Morgan’s boss, Jamie Dimon, who declared Bitcoin a “dangerous” fraud, fit only for use by drug dealers, murderers and people living in places such as North Korea.

“The currency isn’t going to work. You can’t have a business where people can invent a currency out of thin air and think that people who are buying it are really smart.”

Away from the hyperbole, digital currency can be defined as a type of currency that is non-physical. This means it is not represented by banknotes or coins. It also means that it can only be transmitted or exchanged by electronic means. Typically, it allows a high degree of anonymity, instantaneous transactions and borderless transfers of ownership.

Bitcoin stole a march on its competitors and now leads the digital currency pack by many virtual miles, yet others are establishing themselves. Some have received recognition for their more advanced features compared to Bitcoin. Others, such as Ethereum and Ripple, offer themselves specifically as enterprise solutions.

cryptocurrencies and frand and hacking

How does Bitcoin work?

Wallets

You install a Bitcoin wallet on your computer or mobile phone to generate a Bitcoin address. You can create more addresses whenever you need them.

By sharing your address, people and organisations can pay into it, and you can pay into theirs.

A Bitcoin address should only be used once.

The blockchain

The Bitcoin network relies on a shared public ledger called the block chain. This holds a decentralised record of all transactions which is updated and held by all users of the network.

It records all confirmed transactions and guarantees that each wallet has the required Bitcoins for a transaction.

Private keys

Bitcoin transactions from one wallet to another pass through a private key.
This authorises and signs the transaction, using mathematical proof, to confirm its validity and to ensure it cannot be changed.

Mining

All transactions are confirmed by the network in the following 10 minutes, through a process called mining.
This prevents transactions being altered in any way.
Why do hackers love Bitcoin?

The reason hackers love Bitcoin is not primarily due to any security flaws inherent in the system. It is the anonymity that it offers that makes it so attractive.

Bitcoin’s decentralised technology allows secure payments and storage of money that doesn’t require banks or people’s names. In the wrong hands, this can make it an ideal tool for making transactions that are deliberately hard to trace.

How to protect your business from Bitcoin fraud

At present, security in the world of digital currencies is still very much in its infancy. It may be tempting for businesses to stay well away from this area until things improve. But with the proper measures in place, Bitcoin has serious potential to revolutionise industries around the world.

Lee Murphy, owner of accountancy software Pandle, feels the benefits of Bitcoin for businesses are huge:

“Moving forward, I believe Bitcoin will be a useful tool for businesses, especially in terms of payments between companies internationally. For example, the movement toward cryptocurrency means having to deal less and less with fluctuations in exchange rates across markets.”

At the lowest level, malicious types will always find a way to trick unsuspecting victims, and with digital currencies it is often a case of new tools but old tricks. Common Bitcoin scams may well look familiar to you. They include:

For Bitcoins owned by businesses, multi-signature wallets are a fantastic method of protection from hackers; requiring two separate authorisations from two separate parties before any Bitcoins are released. While the first party would be the business in question, the second party would be a service that screens the transaction for fraud, making multiset accounts significantly more difficult to steal from.

For these kinds of cons, the first line of defence will always be security systems. Regularly updated protection is the best preventative measure against hackers and viruses. In addition, thorough staff training and awareness will ensure that anything that slips through the net is caught sooner rather than later.

About

TradersDNA is a leading digital and social media platform for traders and investors. TradersDNA offers premiere resources for trading and investing education, digital resources for personal finance, market analysis and free trading guides. With a comprehensive financial overview and dictionary, multi asset trading preparation content and active trading strategies. TradersDNA is a primary destination for retail and institutional traders / investors of all stages.

Disclaimer

TradersDNA is a forex and financial news and resource portal offering economic news to global forex traders each trading day.
Risk Warning: All information on TradersDNA, including opinions, charts, prices, news, data, Buy/Sell signals, research and analysis is provided as specific general market commentary, most of it from identified authors and sources, and does not constitute any investment advice. Before deciding whether or not to take part in foreign exchange or financial markets or any other type of financial instrument, please carefully consider your investment objectives, level of experience and risk appetite. Do your research and homework and do not invest more money or financial resources than you can afford to lose.